Industrial profits fall in China in July

Dominic Morgan

3 months ago

Profit growth in China’s industrial economy slowed for the third consecutive month in July, according to the latest data from the National Bureau of Statistics, suggesting that the Chinese economy is continuing to weaken.

Profits for large industrial enterprises grew 16.2% year-on-year in July, down from 20% in June, the Financial Timesreports.

China’s metals producers are continuing to grow strongly, with profits up 97.8% for the first seven months of the year, but automakers have seen profits grow only 1.6% and electronics manufacturers are growing at only 0.9%.

Analysts at UBS have also warned that a further escalation of the US-China trade war could damage the bottom lines of industrial companies.

“If tariffs were to be imposed on all US-China trade, we estimate the first round impact of this risk-case scenario would initially be a 4 per cent cut in Asia ex-Japan earnings, with IT hardware, industrials, and autos the hardest hit sectors,” UBS analysts wrote in a note. “The second-round impact – accounting for indirect consequences like reduced capital spending – would be a much larger 10 per cent earnings hit.”